John Key MP
National Party Finance Spokesman

17 May 2006

Cunliffe in serious trouble over Telecom comments

Communications Minister David Cunliffe has shown his ineptidude and commercial naivety by his hamfisted comments on Telecom's dividend policy, says National Finance spokesman John Key.

"Mr Cunliffe was running scared in Parliament today after the Stock Exchange referred the comments he made yesterday to the Securities Commission.

"Mr Cunliffe is in serious trouble over his comments. He clearly has inside information. He sets the policies, including the vital decision in 18 months' time over whether Telecom is structurally separated into lines and retail units.

"What was the purpose of his comments other than to send a signal to Telecom?

"His comments to the Bloomberg newswire yesterday have wiped $200 million off Telecom's value. This follows the $2.6 billion in market value the company lost from the unbundling announcement.

"Not only that, but because Mr Cunliffe talked to a newswire that feeds to wholesale investors - not mum and dad investors - he has overseen the savaging of one group of shareholders over another.

"During the afternoon yesterday after his comments, there were 75 million trades in Telecom stock - a massive increase on normal volumes.

"Mr Cunliffe's comments show a complete lack of understanding of the rules governing capital markets.

"His comments follow not only the unbundling leak, but Helen Clark's comments in relation to Air NZ just before the Government bailed it out.

"David Parker resigned over a minor breach of the Companies Act. Mr Cunliffe appears to have grossly breached the Securities Act provisions, and should follow suit and resign," says Mr Key.

ENDS

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